Chrome Alloy Imports - Conflicting U.S. Goals

By Jim HoaglJanuary 27, 1978

President Carter is being asked to choose between two foreign policy goals that he has endorsed with equal fervor - supporting free trade and condemning South Africa's apartheid system of racial discrimination.

Carter's choice, due to be made before the end of the week, is either to uphold or to overturn a recommendation by the International Trade Commission to impose a 30 per cent duty on imports of chrome alloys from South Africa and three other countries.

Domestic producers, who are urging the White House to agree to the new restrictions, are openly reminding the President of his repeated condemnations of apartheid.

But industry sources reported yesterday that the White House's Trade Policy Staff Committee is urging the President to reaffirm free trade as an overriding goal by ruling that new restrictions on High Carbon Ferrochromium would harm national economic interests.

The ten-member interagency committee is chaired by an assistant to the President's Special Representative for Trade Negotiations. Robert Strauss, who currently is engaged in intensive negotiations with a number of foreign countries on trade policy.

Trade Policy Staff Committee members declined to confirm or deny yesterday that they had voted to oppose the ruling delivered in December by the International Trade Commission, which regulates tariff rates and trade quotas. The Commission voted 3-1 in December that imports of high carbon ferrochromium from South Africa, Rhodeisa, Brazil and Yugoslavia now pose "the threat of serious injury "to U.S. producers. Carter has until Jan. 30 to override the ruling.

High carbon ferrochromium is a smelted alloy produced from chrome ore and used primarily in the production of stainless steel. The December trade commission ruling endorsed arguments from the five domestic producers of the alloy that the doubling of imports over the past five years and more recently, sharp price-cutting by the South African, producers are largely responsible for the loss of more that $14 million in profits and about 200 jobs in the domestic industry since 1974.

Union Carbide Corp., an American firm that operates a ferrochromium smelter in South Africa, and South African companies argued that increasing duties would boost the price of stainless steel, would have an inflationary impact on the U.S. economy and would make it more difficult for the seriously depressed American stainless steel industry to compete abroad. The domestic producers disputed those calculations.

The United States imported $70 million worth of the chrome alloy in 1977. South African provided about 50 per cent of the total imports, resistering a sharp increase in the second half of 1977 after the Carter Administration reimposed a trade [WORD ILLEGIBLE] on Rhodesian chrome.

The International Trade Commission based its finding entirely on economic factors and did not deal directly with South Africa's labor and racial policies. With the decision moving to the White House the domestic African provided about 50 percent of the apartheid spokesman such as Rep. Porron J. Mitchell (D-Md.), Chairman of the Congressional Black Caucus, who has visit a Carter to support the new tarrif rate as clear proof of the administration's feelings about "the abhorrent actions" of the South African government.

"Knowing how strongly President Carter feels about human rights, we would not expect him to send a negative signal on that question by overriding a strong recommendation from the Trade Commission," asserts Angelo Tarallo, associate general counsel for Airco, one of the domestic ferrochromium producers. Acknowledging that he was concerned about reports of strong opposition from Strauss's office. Tarallo said the producers were seeking a brief delay in Carter's decision to give them time to meet with Strauss or his chief aides.

Tarallo asserted that the ability of Union Carbide and other producers in South Africa to cut their selling price from about 40 cents a pound at the end of 1976 to about 30 cents a pound today "is an economic benefit of apartheid" and its restrictions on black labor in South Africa.

Officials at Union Carbide respond that their subsidiary in South Africa treats and pays black workers equally and has made clear its disapproval of apartheid. They note that the producers did not cite political opposition to apartheid during the Trade Commission hearings.

Union Carbide's case stressed that no chrome ore is found in the United States and the only economic way to produce high carbon ferrochromium today is to move close to the source of the ore and to introduce modern technology for the process. The company asserted that domestic producers have failed to do this.